1. qinbafrank(@qinbafrank): The Most Cautious Bull Market in History
Glassnode suggests that this may be the most cautious bull market in history. Two positive signals have been observed: despite recent price fluctuations, long-term holders have started accumulating Bitcoin for the first time since December 2023. Additionally, there has been a positive inflow of funds into spot Bitcoin ETFs (close to three weeks of net inflows), indicating a significant increase in demand.
2. Murphy(@Murphychen888): Understanding the Underlying Logic of Bull and Bear Cycles through Supply and Demand
Regardless of macroeconomic factors, expectations, or emotions, they all ultimately reflect supply and demand, which determine price changes. Observing visual data on supply and demand relationships can effectively help us identify critical points of trend changes in cycles. In this detailed article, I will explain in detail how the trend changes are determined by supply and demand relationships. It is believed that after reading this, whether you are an experienced trader or a newcomer to the cryptocurrency market, you will have a clear understanding of the underlying logic of trend changes determined by supply and demand relationships.
We all know that in each bull market cycle of #BTC, long-term holders (LTH) distribute chips to short-term holders (STH). Therefore, LTH plays the role of the supply side, while STH is the demand side. The data on the changes in the holdings of LTH and STH in the past three cycles show the shift in supply and demand relationships. When the curve of STH holdings (red waveform) rises, it means that the demand of short-term holders is increasing; at the same time, the curve of LTH holdings (blue waveform) is decreasing, indicating that long-term holders are starting to distribute and act as the main selling pressure in the market. Through observation, it can be seen that in each bull market cycle, the red waveform will have 2 peaks, indicating 2 demand peaks of STH in one cycle. The peak of the STH curve usually corresponds to the bottom of the LTH curve, indicating a critical point where the selling pressure may become oversaturated (LTH distribution) and new demand is about to be exhausted (STH acquisition).
2015-2018 Bull Market Cycle:
When STH demand starts to rise (see red arrow in the image), it also marks the beginning of the bull market from the bottom of the bear market. The first peak of STH demand coincides with the halving day. The second peak of STH demand marks the top of this cycle.
2019-2021 Bull Market Cycle:
Similar to the previous cycle, when STH demand starts to rise (see red arrow in the image), it also marks the beginning of the bull market from the bottom of the bear market. The first peak of STH demand occurs before the halving day. The second peak of STH demand also marks the top of this cycle.
2023 Bull Market Cycle:
Unlike the previous two cycles, in this cycle, when the market starts the bull market from the bottom of the bear market, STH demand does not rise synchronously but decreases. Furthermore, LTH has not started distributing (a characteristic of atypical bull markets).
This indicates that from January to December 23, STH did not sell their chips, and over time, they gradually turned into LTH, resulting in the phenomenon of the red line decreasing and the blue line rising (see yellow arrow in the image) while the price rises. Therefore, the early stage of this bull market grew in a low liquidity environment where neither distribution nor demand occurred.
It was not until January 10th when the ETF was approved that STH supply began to turn upward, starting to accept LTH distribution. This includes the 320,000 BTC reduced by Grayscale and the 530,000 BTC held by other ETF funds.
Coincidentally, the first peak of STH demand also occurs around the halving day, similar to the 2015-2018 cycle. From the data, the first peak of STH demand in each cycle will cause a certain degree of pullback in BTC price, but this is only a part of the entire bull market cycle.
Another interesting discovery…
Although the number of BTC distributed by LTH and acquired by STH in each cycle is not the same, when divided by the total circulating supply of BTC at the time, the ratio obtained from the data appears very regular.
To observe this valuable discovery more intuitively, we have compiled it into the following table:
[insert image]
2015-2018 Bull Market Cycle:
During the first demand surge from October 3, 2015, to July 8, 2016, STH acquired a total of 1.31 million BTC, accounting for 8.4% of the total circulating supply of BTC at the time.
During the second demand surge from December 17, 2016, to December 16, 2017, STH acquired a total of 2.6 million BTC, accounting for 15% of the total circulating supply of BTC at the time.
2019-2021 Bull Market Cycle:
During the first demand surge, STH acquired a total of 750,000 BTC, accounting for 4.2% of the total circulating supply of BTC at the time.
During the second demand surge, STH acquired a total of 1.96 million BTC, accounting for 10.5% of the total circulating supply of BTC at the time.
From the data, it can be seen that in the first two cycles, the first STH acquisition accounted for 4%-8% of the total supply, and the second STH acquisition accounted for 10%-15% of the total supply. Also, the second acquisition ratio is 1.8-2.5 times higher than the first one.
2023 Bull Market Cycle:
During the first demand surge from December 3, 2023, to April 14, 2024, STH acquired a total of 1.16 million BTC, accounting for 5.9% of the total circulating supply of BTC at the time. This falls within the range of 4%-8% as concluded from the above data, indicating a reasonable acquisition amount and that the market operation rules have not changed due to the approval of the ETF. Based on the above data analysis, it is expected that the second peak of STH acquisition will be approximately twice the amount of the first peak, around 2.32 million BTC.
Therefore, we should have absolute confidence and look forward to the outbreak of the second STH demand in this cycle, which will truly mark the peak of the bull market and is the most likely period for altcoin season to occur. I also commend all Chinese cryptocurrency on-chain data analysts, as on-chain data is not rigid but, if you are good at discovering, making bold assumptions, and rigorously verifying, it is a valuable reference for trend traders.
3. Rocky(@Rocky_Bitcoin): The Ever-changing World and Avoiding Stagnation
Why is the current market so difficult to navigate compared to 2016 and 2021?
1. Macroeconomic factors are completely deviating from common sense. Whether it is the cycle of inverted short and long-term interest rates, economic fundamentals versus market expectations, geopolitical emergencies, or conflicting performances of major asset classes, they are constantly reshaping a new understanding of anti-globalization economics. As the saying goes, ‘what has been united will be divided, and what has been divided will be united.’ We have enjoyed and understood the united state of the global “Earth Village,” growing up in this state where global supply chain distribution is harmonious and cooperation orderly under the WTO system, with global trade flourishing. Without experiencing the collapse of the Bretton Woods system or the 30 years of Japan’s decline after the Plaza Accord. Recently, I heard a speech by Fu Peng, talking about the need for completely different thinking patterns for economic common sense in the first 30 years and the next 30 years, which was very inspiring. Using the financial thinking common sense of the past 30 years to think about and invest in the world of the next 30 years will inevitably lead to setbacks.
2. The integration of Web3 into the global financial market has greatly strengthened the game and arbitrage paths. A very typical phenomenon is that currently, the prices of cryptocurrencies are extremely sensitive to the release of U.S. economic data, which was rare in 2016 and 2021. However, this is a double-edged sword with advantages and disadvantages.
On the positive side: volatility will decrease, security will increase, there will be greater technical arbitrage opportunities, after global financial binding, predictability will be higher, and more in line with cyclical regularity.
On the negative side: expectations of price increases will decrease, with the increasing number of financial instruments and the growing capital of participants, in the context of lucrative arbitrage profits and one-sided price increases, volatility will effectively flatten out, making it more difficult for retail investors to profit with the entry of professional players.
3. The rise of populism is leading to a change in investment logic
With the stagnation and slowdown of the global economic engine, the average income of residents has decreased, inflation has soared, and there is growing dissatisfaction and distrust of the government among the people. This has led to various extreme situations, which are visible in actual events, such as the revolution in France, protests in various regions, and various extreme events domestically. However, in the invisible financial field, the most representative is the GME (GameStop) phenomenon during the epidemic and the current prevalence of #MEME coins, where retail investors and VCs are not taking each other’s bids. This confrontation between ‘the people’ and ‘the elite’ is guiding social behavior in various aspects, including investment.
4. In the age of AI after the intelligent era, human power becomes insignificant. Humans alter nature, humans change the climate—this grandiose tone of humans prevailing over nature. But in the current scenario of the AI arms race, humans are feeling fear and anxiety, not only due to job replacement factors but also due to the anxiety of the unknown after the arrival of new technological paradigms, similar to when a horse-drawn carriage encounters a Mercedes-Benz internal combustion engine, or when telegraphs and telephones encounter the World Wide Web. Faced with new things, apart from a small number of elites leading the change in the world, the vast majority still have a sense of fear. This can be seen in the negative news about AI in the public opinion.
The limitations that AI brings to the investment field are increasing. With the ease of AI in coding and accessing information, several investment companies I am familiar with are using AI extensively to run strategies and quantify, and to capture information data for investment research. Through conversations, it has been discovered that when optimizing strategies, everyone’s strategies tend to converge and become remarkably similar, which undoubtedly amplifies the limitations of investment strategies, as encountering the same event factors will increase market volatility. The information and thinking cocoon brought by the AI era is no less harmful than long-term scrolling on Douyin (the Chinese version of TikTok). Because the authority of independent thinking has been delegated to AI.
Current strategies:
1. For non-professional players, allocating to #BTC is still the simplest and most correct investment strategy, executed through dollar-cost averaging, regular quantitative investment, combined with the 9-god index for safety and stability.
2. For professional players (opinions are for reference only), laying out strong market tracks, focusing on AI, RWA, MEME, and SOL ecosystems, combining market sentiment monitoring tools with on-chain data, focusing on sector rotation, doubling the principal, orienting with market sentiment, and switching arbitrage. In the case of insufficient incremental capital in the market, it is wise for retail investors to stick together, similar to A-shares’ group trading. If there is a window guided by media communities, the success rate is even higher. For example, the recent #NOT #FLOKİ.
In conclusion: adapt to changes, move with the market, avoid rigid thinking and path dependency, which is crucial. Additionally, sticking together with large funds is also important.
02 On-chain Data
@EmberCN:
Since 5/24, whales/institutions betting on the ETH ecosystem have accumulated $32.52M worth of ETH ecosystem-related tokens. After selling 5,748 ETH ($22.12M) on-chain and through Binance at an average price of $3,848 on 5/28, they have continued to buy $4.12M worth of ETH ecosystem tokens in the past 16 hours: 114,800 LINK ($2.1M); 442,600 LDO ($1.01M); 9,773 AAVE ($1.01M).
03 Sector Analysis
According to Coinmarketcap data, the top five cryptocurrencies in the 24-hour popularity ranking are: BEER, XOR, TURBO, TRUM.According to Coingecko data, the top five sectors with the largest increase in the crypto market are: Masternodes, Solana ecosystem, Moonriver ecosystem, FTX bankruptcy entity, and Runes.
Hot Focus – 10x Research: Bitcoin’s New High Depends on Inflation
When the CPI index was announced on February 13th to be 3.1%, lower than the expected 3.4%, indicating a slowdown in inflation, the inflow of funds into Bitcoin spot ETF gradually recovered. The ETF fund inflow turned positive at the end of January, but only started to accelerate slightly before the release of the CPI data on February 13th. However, when inflation rose again to 3.2% on March 12th, the inflow of funds into Bitcoin ETF stopped immediately as the market discounted the expectation of 2-3 rate cuts.
As a result, the price of Bitcoin gradually dropped from around $73,000 to around $60,000, and it was only after the dovish remarks by Federal Reserve Chairman Powell on March 20th that the downward trend finally slowed. He assured the market that the Fed expects to cut rates three times in 2024.
On April 10th, when the CPI exceeded the expected 3.4% to reach 3.5%, a similar situation occurred, with Bitcoin falling again to $60,000, and by April 30th, the price fell to around $56,500 in the weak ETF fund flow situation in Hong Kong.
In a similar manner, at the FOMC meeting on May 1st, Federal Reserve Chairman Powell “intervened” again, halting the downward trend of Bitcoin. On May 15th, when the CPI report reached the expected 3.4% (lower than the previous month’s 3.5%), Bitcoin rebounded, and more importantly, the inflow of funds into Bitcoin spot ETF recovered. Traders who understand how Bitcoin reacts to CPI should have confidence in trading in the opposite direction of the previous month’s CPI index.
From the CPI rise on March 12th to 3.2% to May 15th (about 46 days in total), when the CPI data matched the market’s prediction of 3.4%, the purchase fund volume of Bitcoin spot ETF was only $1 billion; since May 15th, we have seen about $1.5 billion in funds inflow for seven consecutive days.
With the next release of CPI data scheduled for June 12th, we expect the inflow of funds into Bitcoin spot ETF to remain strong in the next two weeks, which should help Bitcoin reach new historical highs. As the market expects disappointing inflation on May 15th, our model predicts a slight decrease in Bitcoin prices. When modeling inflation for the next two months, we may see inflation hovering at current levels and soon showing a downward trend. And if the inflation index reaches 3.3% or lower, Bitcoin prices are expected to reach new historical highs. This will continue to provide “a certain momentum” for Bitcoin spot ETF investors to allocate Bitcoin and support Bitcoin prices.
According to our model’s speculation, inflation will gradually cease to be a problem. It will not only become a medium-strength boosting factor but, as time progresses towards the end of summer, it is likely to become a strong factor – as predicted by the model, inflation will gradually decline.
Macro Analysis
CITIC Securities: Bitcoin’s Unique Cross-Border Mobility in the Era of Deglobalization
We believe that the core factors affecting Bitcoin are mainly focused on global liquidity changes, risk preferences, supply and demand, and technological advancement, presenting the attributes of risk assets.
1. Global Liquidity Changes: Bitcoin’s original design has the characteristic of avoiding the risk of fiat currency volatility, and the turning point of global liquidity has a certain leading effect on Bitcoin price trends.
2. Supply and Demand, and Technological Advancement: The limited supply determines the scarcity of Bitcoin, and the rapid increase in the size of ETF issuance on the demand side brings stable purchasing power to the subsequent bull market.
3. Risk Premium: Industry hotspots, policy regulation, and geopolitical risks will affect price trends. Among them, geopolitical event disturbances trigger concerns about cross-border transfers and strong regulation in financial markets, making Bitcoin show temporary hedging functions. In addition, Bitcoin shows obvious risk asset attributes.
4. Allocation Value: The order of future asset price trends may be Bitcoin > Gold > USD in the medium to long term. Bitcoin may perform better than gold under the supply-demand tension and deglobalization trend. However, considering factors such as the monetary policy differences between the US and Europe in the short term, the USD may strengthen, posing disadvantages for both Bitcoin and gold.
5. Research Report Selection
BeInCrypto: 5 Coins That May Surge in June
Altcoins
As the cryptocurrency market enters the last month of the second quarter of 2024, investors are once again asking which altcoins to focus on.
To answer this question, BeInCrypto has compiled a list of tokens that may experience significant growth in the next four weeks.
1. PEPE prices may continue to rise
PEPE prices have not only been the best-performing meme coin in the past month but also the best-performing altcoin. The frenzy surrounding these meme tokens drove PEPE to hit historic highs throughout the month, making it one of the top 20 cryptocurrencies globally.
The trading price of this crypto asset is $0.00001474, hitting a historic high of $0.00001725. However, this did not deter investors as they remain optimistic about the uptrend.
The Average Directional Index (ADX) is a key tool for measuring trend strength, and it is above the threshold of 25.0. This means that the uptrend has significant strength and may continue.
However, if profit-taking occurs, PEPE prices may lose support at $0.00001430 and fall below $0.000012000.
2. RNDR’s Rise in AI
Although Render’s price has been consolidating over the past month, a breakthrough may occur in the next few days. This is because the field of artificial intelligence (AI) has witnessed significant growth.
The rise of the AI computing field leader, NVIDIA, has further fueled this growth. In May of this year, NVIDIA surpassed Google and Amazon to become the world’s third-largest company by market value. The company’s total valuation is currently $2.7 trillion, slightly below Apple’s $2.9 trillion.
Therefore, if the growth continues, RNDR may benefit from speculative potential and break through the consolidation between $11.4 and $10.0.
However, if the cryptocurrency market remains sluggish, even external clues may not trigger a rebound. This would keep Render’s price in consolidation or even break below the key support level of $10.0.
3. International Football Season May Benefit Chiliz (CHZ)
Chiliz is the platform of the blockchain interactive website Socios.com, known for its fan tokens, and its native token CHZ is seeking profits. In most cases, these fan tokens are issued in the name of sports teams, mainly football teams (or soccer).
As the international football season approaches, the liquidity of these fan tokens may increase. The upcoming 24th European Cup and Copa America will be key events affecting the trading of fan tokens.
As network and asset usage increases, CHZ may benefit. Therefore, altcoins may break through $0.154, surpass the barrier of $0.167, and possibly set a new high in 2024.
Due to uncertain market conditions affecting the cryptocurrency market, the likelihood of non-compliance failure is also high. Therefore, CHZ may fall to $0.138 or lower.
4. BONK Following in the Steps of Frogs
The rise in BONK’s price is as surprising as anything else in the cryptocurrency world. However, with investor support for meme coins, following the rise of PEPE, this token has entered the list of the top 50 cryptocurrencies.
The altcoin recently closed at $0.00004114, hitting an all-time high closing price, but far below the historic high of $0.00004800. Therefore, with the support of BONK holders, this meme coin may continue to rise and attempt to set a new high for the year so far.
If not, BONK’s price may return to $0.00004000 or lower, slowing down the uptrend without causing significant losses to investors.
5. Solana (SOL) – Institutional Favorite
Solana’s price may not benefit from broader market clues but from institutional actions. Despite a slow start this year, SOL is now the largest asset in terms of inflows. Since the beginning of 2024, Solana has surpassed Chainlink, accumulating $29 million in inflows.
Most of this was raised within the past month, reaching $19 million. With the market recovering, this trend is expected to continue in early June. Therefore, as institutions continue to accumulate more SOL, Solana’s price will also rise, potentially reclaiming $200 as a support baseline.
However, if it fails to break through $190 (it has done so twice in two months), the altcoin may fall to around $169. This would invalidate the bullish argument, keeping it subdued until the third quarter.
Tags
Web3 Research Society
Altcoins
Bitcoin
Note: The contents of all articles represent the views of the authors and do not constitute investment advice.
